The study shows Penny's Find to be a financially viable project generating $7.6 million undiscounted free cash flow in less than a year based on a gold price of A$1,500/oz. Every $100 rise in the gold price over $1,500 generates an extra $2.0 million free cash flow.
The BFS proposes conventional mining of a single open pit to a depth of 80 metres using excavators and dump trucks with ore transported to a nearby toll milling facility.
Empire plan to commence open pit mining during the September quarter with first gold production in the second half of 2016.
David Sargeant, managing director, commented: "With an average open-pit grade of 4.62 g/t gold to a depth of 80 metres this project represents an excellent near term production opportunity for Empire given the current high gold price."
Empire holds a 60% interest in and acts as manager for the Penny's Find gold project, the remaining 40% interest is held by unlisted Brimstone Resources Ltd.
First gold production from an 80 metre deep open pit is scheduled to commence in the second half of 2016, following the selection of a mining contractor.
Empire has outlined an open pit probable reserve of 146,000 tonnes at 4.62 g/t gold for 21,700 ounces of gold within an overall JORC 2012 compliant resource of 470,000 tonnes at 4.42 g/t gold for 66,800 ounces of gold.
The deposit is located on a granted mining lease with mining plans being approved in May 2016.
Empire recently signed an agreement that would see ore from Penny's Find treated at the nearby Lakewood Mill owned by Golden Mile Milling. The ore will be trucked 63 kilometres by road from Penny's Find.
BFS open pit details
The study estimates $1.5 million capex for $7.6 million free cash flow over the open pit mine life of 11 months.
Free cash flow increases to $11.6 million if the price of gold used is increased to A$1,700 per ounce from A$1,500 per ounce.
Drilling in progress
Empire recently commenced grade control drilling at Penny's Find to define the position of the gold zone close to surface and increase the confidence in the early mining phase.
The 88 hole reverse circulation drill program is the first of three scheduled in the soon to be mined 80 metre deep open pit.
This 2,500 metre drill program is a part of pre-development activities occurring prior to the completion of project finance negotiations.
Underground potential at Penny's Find
A feasibility study has commenced on gold mineralization located below the planned open pit where there is an indicated and inferred resource of 170,000t @ 5.40g/t Au.
An initial underground mine design has been completed to ensure it is able to mesh smoothly with the open pit.
Gold mineralization remains open at depth and has been identified at a depth of 240 metres vertically below surface.
Empire sees substantial upside at Penny's Find once the feasibility study has been completed.
Yuinmery copper gold project
The Yuinmery project is a volcanogenic massive sulphide (VMS) copper gold project located 80 kilometres southwest of Sandstone in Western Australia.
The JORC compliant resource was recently upgraded in May 2016 to 1.27 million tonnes at 1.9% copper and 0.7 g/t gold based on a 1.0% copper cut off.
Empire owns 12 million shares (~14%) in FYI Resources, which is focused on developing the Sino-Lao potash project in Laos.
FYI Resources is currently in joint venture negotiations with a Chinese group regarding resource development and potential production in Laos.
Drilling is currently in progress at the Sino-Lao potash project.
All approvals for Penny's Find have now been secured meaning there are no technical impediments to mining plans upon completion of financing arrangements.
The 80 metre deep, high grade open pit represents a strong near term production opportunity for Empire.
The open pit will generate A$7.6 million free cash flow based on a A$1,500 per ounce gold price and every A$100 per ounce price rise generates an additional A$2 million cash flow.
Project economics are strengthened by the AUD gold price which is trading strongly at A$1,785 per ounce.
The Empire share price continues its strong year, trading up 220% year to date at $0.029 per share.
Furthermore, the project has good potential to secure a long term future through exploration at depth.
Near term catalysts regarding Penny's Find are as follows:
- Securing financing arrangements;
- Selection of a mining contractor;
- Grade control drilling of the initial mining;
- Underground feasibility;
- Establishment of surface infrastructure preparatory to mining start; and
- Commencement of mining.
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